It still languishes in the polls, but last week was a good one for the Government.
The Tax Forum, which had been widely written off by many commentators (including me) turned out to be surprisingly constructive. On the back of the tax event, the Government also hosted a one-day jobs summit, which focussed on Australia’s troubled manufacturing sector.
The tone of the debate during the three days of high-level policy talks was positive and respectful. Even if no big announcements emerged, a series of small but significant measures were agreed upon. On tax, Treasurer Wayne Swan will work to increase the tax-free threshold to $21,000, effectively cutting the taxes of hundreds of thousands of Australia’s low-income earners. There is also a modest but interesting proposal to improve cashflow for struggling businesses, with a "carry back" tax refund that will assist firms making a loss.
Perhaps most importantly, Labor has also broadened the tax conversation, including in difficult areas like raising taxes on the wealthy and eliminating inefficient state imposts. It’s not sweeping reform of the sort recommended by Ken Henry’s tax review, but it is an important step toward a kinder and gentler political debate — something that Labor proved itself incapable of fostering during the debate about the mining tax last year.
On jobs, the forum focussed on manufacturing, with strong union involvement but considerable policy input, most notably from Barack Obama’s manufacturing policy advisor, Andrew Liveris, the President of Dow Chemical. Liveris told the forum that "manufacturing in particular has the power to create jobs and value and growth to a degree that no other sector can — not tourism, not the financial services sector, not any services sector." These positive spillovers flow through the rest of the economy, and therefore require special government policies to encourage manufacturing, he argued. This is an argument you won’t hear from the Treasury or the Reserve Bank, and it was warmly received by the sector’s cheerleaders, who have had a hard time winning a policy beauty contest against the rampaging investment of the mining sector.
One upshot is that Julia Gillard will chair a prime ministerial taskforce on the manufacturing sector. Another is that the Government will introduce a special tariff concession to investment projects larger than $2 billion that can demonstrate an industry plan to involve Australian suppliers. As Heather Ridout remarked to reporters, it’s certainly no "silver bullet", but it will help manufacturers to bid for jobs on big infrastructure projects.
For the Government, the real benefits from the tax and jobs events were political. For months, the Government has been telling us that it is not worried about its manifest unpopularity and is instead getting on with the business of running the country. Unfortunately, no one has been listening. As the screenwriters like to say, the golden rule of narrative is "show, not tell", and that’s where the Gillard Government has struggled.
And that’s why three days of policy talks worked. Not only did they focus on the economy, Labor’s strong suit, but they also eschewed the vicious dogfighting that has marked parliamentary debate in recent months. By gathering high level policymakers in a room and forcing them to discuss and defend their arguments in a calm and deliberative manner, the government has finally been able to show itself getting on with governing.
Of course, it helped that the Opposition decided not to turn up. Then again, the Coalition’s credibility when it comes to serious discussions about taxation and budget policy is approaching zero these days, so it’s probably better for all concerned that Joe Hockey didn’t show. The media attention paid to the forum also had the happy side effect of sidelining Tony Abbott’s media stunts. (They still happened, it’s just that no-one much reported on them.)
The Government badly needs more tactics to keep Abbott off the television screens. And perhaps they have stumbled upon one, if they could only recognise it. The tax and jobs summits suggest that the Gillard Government might start to claw back some credibility by returning the political debate to concrete and substantial policy discussion. After all, the Coalition has never had much ability to engage in genuine policy debate, and since Tony Abbott has become leader, they haven’t had to.
In contrast, the best performing Labor ministers are those, like Greg Combet, who are able to muster a calm and methodical command of their portfolio. And yet, amazingly, Labor has generally struggled to build on this advantage. Instead, the Government has generally attempted to fight the media battle on the same terrain of one-liners and sound-bites that Tony Abbott finds so amenable.
Of course, you could argue that the entire CPRS debate was one about policy minutiae that failed to engage the general public, and you’d be right. Communication is not an either/or proposition, and the Government needs to explain policies on multiple levels: to the wonks and analysts with detailed and substantial discussion papers, to the media with stunts and pic facs, and to the general public with the full suite of social media and mass communication tools.
The Government now has the opportunity to build on last week’s momentum with a big week in parliament. It won’t be easy. Proceedings in the lower house will be dominated by the carbon tax and a vote about offshore processing, neither of which will be convivial, temperate or polite.
On the other hand, the prospect of getting the carbon tax through the House of Representatives must in itself be heartening for Labor’s embattled foot soldiers. For those who still believe, here is an example of a concrete economic and environmental reform that a progressive government is negotiating through a minority parliament — in the teeth of public and corporate opposition.
The carbon tax won’t be passed until it clears the Senate, most likely in November. And it is likely to be unpopular with voters for a long time after that. But it is undoubtedly a major policy reform addressing climate change, one which neither John Howard nor Kevin Rudd’s governments were able to implement (you can of course argue that they didn’t want to).
Labor’s membership might be declining and its party structure increasingly moribund. But here, finally, is a major reform which, if implemented, the party faithful can rightly feel proud of.
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